Everything You Need To Know About Flipkart's and Amazon's Tussle With Traders
The tussle between e-commerce companies and the traders associations has taken a new turn after it alleged that through deep discounting, Flipkart and Amazon were going against tax regulations
The tussle between e-commerce companies such as Flipkart and Amazon, and the traders associations of India continues unabated. On Sunday, the Confederation of All India Traders (CAIT) sent a letter to finance minister Nirmala Sitharaman asking her to address the concerns around deep discounting and potential tax avoidance.
Both Amazon and Flipkart have “designed their business model based on highly predatory pricing and deep discounting and charging GST (goods and service tax) on artificially lowered price”, reads the letter from Praveen Khandelwal, secretary general at CAIT.
Khandelwal adds that as per regulations, companies must charge GST on actual market value of a product rather than the discounted price.
Amazon and Flipkart did not respond to requests for comment at the time of publication.
What Has Happened So Far
In September, CAIT sent a letter to Piyush Goyal, the minister of commerce and industry, stating that e-commerce marketplaces were offering deep discounts during the festive season sales, which was against the foreign direct investment (FDI) policy and was hurting local vendors.
It also said that these companies had turned to inventory-based models, reportedly a violation of FDI policy.
About a month later, representatives of the traders’ body met Goyal to discuss their problems. The government then summoned the companies, and said it intends to create a level-playing field for everyone. No predatory pricing or deep discounting policies would be allowed, Goyal said.
While both Flipkart and Amazon denied the allegations at a meeting held by the Department for Promotion of Industry and Internal Trade (DPIIT), the CAIT reportedly showed e-mails sent by the platforms to sellers, asking them for shared-models for discounting.
A few days later, CAIT brought forward similar claims again, but this time, both the companies said the discounts offered were from the brands themselves, not the platforms.
In late October, DPIIT asked Amazon and Flipkart for a list of their top five sellers with details such as business done, investments and commission agreements.
What Does The CAIT Want?
Among the major demands, CAIT wants a strict policy around discounts that e-commerce platforms can offer, something that often takes people away from brick-and-mortar stores, which cannot afford similar discounts.
Khandelwal, while requesting Sitharaman to conduct enquiries around the issues, also asked that a delegation of the CAIT be allowed to give a detailed presentation on the matter, along with relevant evidence.